Short Term Lettings - where are we going?
Over recent years, Short Term Lettings have become a growing concern for strata schemes, bodies corporate and various governments alike. There are abundant numbers of online services catering to the demands of owners who wish to allow their apartments to be occupied on a short term basis. Amongst these services, Airbnb provide the following rental statistics on rental activity in the Sydney region alone:
- Over half of all Short Term Lettings with Airbnb provide the use of an entire apartment, with 38.4% for a private room;
- By far, the most common lettings with Airbnb are 1 or 2 bedroom apartments;
- Approximately 85.1% of lettings with Airbnb are for a period of 1 to 3 months.
Owners in strata and bodies corporate are becoming increasingly concerned about issues such as safety, privacy and noise associated with a transient population. Across the various States and Territories Governments have had difficulty in balancing the rights of owners to use their properties how they chose and those involved in multi titled structures. <br>
Recent legal cases in Victoria have highlighted the issue where owners in multi ownership models do not necessarily want short term letting arrangements in their particular buildings. The Court in that case allowed the short term letting arrangements to stay.
What are the issues
Generally the issues come down to the clash between local zoning, development consents for particular buildings and then the relevant strata legislation that applies (and in each State/Territory it is different), and not forgetting the will of the owners.
Each local area has various zoning requirements which limit certain types of activities or building construction. These need to be considered in the first instance to see if a particular area is “zoned” short term letting. This can be automatic (for example as being something that is exempt from Council consent and can be undertaken immediately) or with consent of the relevant Council or consent authority.
After this assessment is completed you need to then look at your actual building and whether there are any restrictions on the particular building (for example Serviced Apartment consent in a residential apartment only zone).
Once these two are known you can then look to the relevant strata legislation for assistance on how the strata or bodies corporate can be involved to temper these issues, prohibit the arrangement or be involved in the consent process.
One way that owners can be involved is through the process of by-laws. This requires a steady hand and a steady mind to reach a satisfactory result. In most jurisdictions a strata or bodies corporate can make bylaws regulating a broad range of issues, including safety and security measures, restrictions on the use of common property and the behaviour of occupants within the strata scheme. However, this wide power generally comes with the proviso that a by-law will have no force or effect to the extent that it is inconsistent with the Act or another law or interferes in the leasing of a lot.
That is not to say that a strata scheme cannot proceed with the making of a special by-law to restrict Short Term Lettings. The by-laws of a strata scheme must be consistent with the zoning requirements and the conditions of consent imposed by local Councils on each particular development. For instance, the zoning requirements and conditions of consent to a Development Application for a scheme may prohibit Short Term Lettings in that scheme. Conversely, in other schemes, Short Term Lettings may be permissible subject to the lodgement of a development application.
To be controversial, the issue that is yet to be tested is whether the strata or bodies corporate can be actively involved in the decision making process to the extent that the by-law either makes it practically impossible to have Short Term Lettings or consent is not given at the strata level so the matter cannot proceed to Council in the first instance (as the strata is the owner of the land).
What should a strata or bodies corporate do?
- Thorough enquiries be made of its local Council to determine the zoning requirements and conditions of consent applicable to any particular apartment or building; and
- That any special by-law purporting to restrict Short Term Lettings be drafted in a manner that is consistent with the zoning requirements and conditions of consent applicable to that particular apartment and with regard to the occupancy limits regulated by the new Act.